Why extra payments work so well on a mortgage
A mortgage is the longest and largest loan most people ever take on, so interest has the most time to accumulate. In the first years almost all of your payment goes to interest and barely touches the balance. Anything extra you add skips straight to principal, and because the loan has 20 or 30 years left to run, that early reduction compounds into a large interest saving by the end.
How many years could you knock off?
On a typical 30-year mortgage, an extra one or two hundred dollars a month often moves the payoff date forward by several years and saves tens of thousands in interest. The exact figure depends on your balance, rate, and how early you start. Use the calculator above to try different extra amounts and watch the payoff date and total interest update instantly.
Recasting, refinancing, or just paying extra
Paying a steady extra amount each month is the simplest way to shorten your mortgage and needs no paperwork. Recasting re-amortizes your loan after a lump sum to lower the required payment, while refinancing replaces the loan entirely. This tool models the straightforward case: your existing rate and payment, plus a regular extra toward principal.
Frequently asked questions
- Should I pay off my mortgage early or invest instead?
- If your mortgage rate is higher than what you could reliably earn after tax by investing, overpaying often wins, and it is a guaranteed, risk-free return. If your rate is very low, investing the difference may come out ahead. This tool only shows the mortgage payoff math and is not financial advice.
- Are there penalties for paying my mortgage off early?
- Some mortgages, particularly fixed-rate deals, cap how much you can overpay each year or charge an early-repayment fee. Many allow overpayments of up to a set percentage of the balance per year with no penalty. Check your mortgage terms before committing.
- Does overpaying lower my monthly payment or shorten the term?
- By default, paying extra keeps your monthly payment the same and shortens the term, which is what this calculator models and what saves the most interest. If you ask your lender to recast, they instead lower the required payment while keeping the original term.
- How accurate are these numbers?
- The calculation assumes a fixed rate and consistent monthly payments, compounded monthly. Your actual statement may differ a little because of rounding, payment timing, or rate changes. Use these figures as a guide, not a lender quote.
- Is this financial advice?
- No. This tool only shows the payoff math for the numbers you enter. It does not account for your wider finances, and it is not advice. The figures from your lender are the ones that count.